U.S. set to delay more China tariffs ahead of Trump-Xi meeting
The U.S. is willing to suspend the next round of tariffs on an additional US$300 billion of Chinese imports while Beijing and Washington prepare to resume trade negotiations, people familiar with the plans said.
The decision, which is still under consideration, may be announced after a meeting between Presidents Donald Trump and Xi Jinping set for Saturday at a Group of 20 summit in Japan. A broad outline of the Trump-Xi agenda was discussed in a phone call Monday between U.S. Trade Representative Robert Lighthizer, and his counterpart in Beijing, Vice Premier Liu He.
In an interview with CNBC on Wednesday, Treasury Secretary Steven Mnuchin expressed optimism that a deal could be reached by year end, saying the two sides “were about 90 per cent of the way there and I think there’s a path to complete this,” with a need still for “the right efforts.”
U.S. stock futures jumped on his remarks.
“The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the U.S. economy to get balanced trade and to continue to build on this relationship,” Mnuchin said.
People familiar with the American readout of the Lighthizer-Liu conversation characterized the call as productive. They said both sides discussed how they can present the resumption of trade talks to their domestic audiences as a win.
The U.S. won’t accept any further conditions on tariffs as part of reopening negotiations and no detailed trade deal is expected from the leaders’ summit, a senior U.S. administration official said Tuesday. The Trump administration has said the goal of the meeting is to create a path forward for a trade agreement, after negotiations broke down last month.
Although each side still wants to secure significant concessions from the other, both agreed to dial down the tit-for-tat responses and aim for a truce that could soothe financial markets while their sides resume negotiations, people familiar with the situation said. It’s not clear if they would set a definite timetable for the tariff cease-fire.
The U.S. is prepared to delay the new tariffs for the moment because Beijing wouldn’t have agreed to the meeting otherwise, according to people familiar with the matter.
China is willing to make minor compromises including removing the threat of restricting rare-earth exports to the U.S., people familiar with the matter said.
The talks between the leaders of the world’s two largest economies mark a critical juncture in their nearly year-old trade war, and both sides have plenty to lose if it escalates. Trump is riding a strong economy and booming stock market into his re-election campaign. China’s economy has been slowing, and U.S. tariffs are encouraging some foreign companies to shift production or plan investment elsewhere to avoid the higher costs.
People familiar with the talks say some advisers are pushing Trump to avoid setting a hard deadline at the G20, to avoid a situation similar to when the two leaders met in December and agreed to a 90-day tariff pause. Lighthizer and other advisers, at that point, said it was a fixed tariff-suspension period to allow time for more talks, but the deadline was repeatedly extended. When those negotiations broke down last month, Trump followed through on this threat to raise tariffs on US$200 billion of Chinese goods to 25 per cent from 10 per cent.
The Chinese Commerce Ministry said in a statement that the trade chiefs exchanged views on trade and economic issues during their phone call Monday. USTR didn’t respond to a request for comment on the discussions between Lighthizer and Liu.